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Though checks' popularity is now waning in favor of electronic payments, checks were, for much of the twentieth century, the most widely used noncash payment method in the United States. How did such a relatively inefficient form of payment become so dominant? This article traces the historical evolution of the check, focusing on its relation to complementary and competing payment technologies. Originating in the eastern Mediterranean during the first millennium as a convenient form of payment between local merchants, checks became more versatile through the development of negotiability in sixteenth-century Europe. The suppression of banknotes in eighteenth-century England further promoted the use of checks. In the United States, nineteenth-century legislation discouraged other payment methods and eventually led to a nationwide check payment system. In the twentieth century, under the Federal Reserve's leadership, checks expanded rapidly and became the nation's default payment method. The authors discuss some persistent historical themes surrounding checks: checks' ease of use, which provides advantages over other payment methods but creates risk to businesses and banks; checks' sophistication, which evolved through centuries of legal precedent and operational experimentation; and checks' high costs relative to other forms of payment. Checks' traditional dominance of the U.S. payment system, the authors conclude, resulted from historical happenstances. These events gave the check relative advantages that are only now being overcome by electronic payment technologies. [ABSTRACT FROM AUTHOR]

Argues that there are certain parallels between the on-line payment environment, which led to the development of online currencies and the physical payment environment which led to the debut of bank notes. Model of debt transfer; Combination of local deposit banking and circulating debt through endorsement; Explanations for the popularity of online currencies; Emergence of a demand for payment technologies.

Focuses on a study which examined the economics of payment finality. Model of transferable debt and finality; Distinction between finality and negotiability; Role of finality in check payment; Association between debit cards and check conversions.

Offers a look at the check payment system in the United States. Resource cost of maintaining a check-based retail payment system; Reasons for the use of check float payment; Features of the check payment system in the country; Proposed changes in the payment system.

Examines the design of wholesale payments network in the banking system. Purposes of the wholesale payments system; Differences between net and gross settlement systems; Interaction between the settlement rules of payments system and the bank's decisions concerning its investment portfolio; Implications of the design of wholesale payments network to policy.

Explores the possible impact of fraud on the forms of retail payment such as electronic cash and stored-value cards. Parties involved in the purchases of goods; Optimal incidence of fraud; Key factors influencing the risk of fraud.

Examines in the standpoint of economic theory whether there is any changes in the forms of retail payment. Conflict of interest that confronts all payment system types; Alternatives to check payment; Descriptions of traditional forms of payment; Conclusions.

Examines the role of the Federal Reserve System in maintaining the integrity of the group of institutions known as the payments system. Check-clearing and electronics funds transfer; Interference in cases of insolvency; Parallels between the financial history of the late nineteenth and early twentieth centuries; National Banking Era experience; Criticality of timing in crisis situations.